The global dimension to fiscal sustainability

Joseph Byrne, Norbert Fiess and Ronald MacDonald

Journal of Macroeconomics, 2011, vol. 33, issue 2, 137-150

Abstract: This paper provides a new perspective of fiscal sustainability and financial globalization in emerging and industrial countries. We highlight the importance of global capital market shocks for fiscal sustainability, a relationship which has hitherto been ignored in the empirical literature. Using a factor model we demonstrate that the relationship between deficit and debt is conditional upon a global factor and we suggest that this global factor is related to world-wide liquidity. We also demonstrate that this acts as a constraint on emerging market economies' fiscal policy.

Keywords: Fiscal; policy; Sustainability (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: The Global Dimension to Fiscal Sustainability (2008)
Working Paper: The Global Dimension to Fiscal Sustainability (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:33:y:2011:i:2:p:137-150

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